Net National Product (NNP)
Candlefocus EditorIt is typically expressed in terms of current prices, rather than constant prices (i.e., adjusted for inflation) or in dollars per capita. NNP is one of the best indicators of a nation’s standard of living because it is based on actual net output and includes both consumer goods and consumer services.
As the net value of goods and services produced by a country, NNP is often used by economists and national agencies to assess the economic performance of a country over time. The NNP is calculated by subtracting the costs of producing capital goods, such as machinery and equipment, from the gross national product and adding depreciation of the capital stock, which is the value of the productive machinery and equipment used by a country producing these goods and services.
When analyzing a nation’s economy, economists often look to the NNP as an important indicator of economic progress because it is a net measure of production. By accounting for the depreciation of the capital stock within the GDP, the NNP is a more accurate measure of national economic performance. This is important because a country’s standard of living is based on its ability to produce goods and services and the NNP measures the value that a country produces.
To conclude, NNP provides comprehensive information on the performance of a country’s economy and should be used along with the GDP to provide a more accurate picture of a country’s economic performance and its standard of living. By taking into account depreciation of the capital stock alongside other indicators such as the GDP, the NNP is a more reliable way to measure the productivity of a nation and its citizens.